20141128 BH Report: Broadway

BH Report: Broadway 2014/11/28

Context

It was the fall of 2004 when I went to see a live Broadway musical, Rent, for the first time in my life. It was one heck of an experience that opened up my eyes to this unique genre of entertainment, and since then, I have been seeing more than 5 shows (both musicals and plays) a year - mostly in Broadway, but also in West End and even in Japan.

What's interesting is that Broadway has been around for quite some time (at least 100 years) and that it has successfully transformed itself to make it one of the best tourist destinations as well as for local fans. I share the common complaint that it is pretty expensive form of entertainment, but I'm pretty sure that I love Broadway and that I will continue to keep coming back regardless of prices.

In this report, I tried to explore the relatively recent stats (~20-30 years) on Broadway:

• How is Broadway doing overall as an industry (ticket sales, attendance and prices)?

• How much impact does Tony (annual award ceremony for musicals and plays) have?

• When do shows close? (how low can ticket sales be before closing)

– Are any of the long running shows today close to closing?

In addition, I also put together a case study on an epic "flop" (which is something people don't often encounter or remember unless you happened to be one of small # of audiences who went to see the show)

Summary of findings

• Broadway has experienced strong growth (~5-8% CAGR) in the last 30 years • For the last 15 years, attendance has been flat and almost all of the growth

has been due to price increase – Price doubled in 15 years and quadrupled in 30 years – The rate of price increase has been faster than other forms of

entertainment

• Tony award nomination alone gives quite a boost to ticket sales (unless the show was already popular and sold out) and winning Tony allows you to keep up the sales for the months to follow

• Shows that end up closing generally experience ~50% (or below) gross of potential gross revenue

– The metrics combines the view on "how may tickets are sold" and "how much discount is given out"

• Looking at the top five longest running musicals today...

– Lion King and Wicked are very safe (~90%+ % gross of potential) – Phantom and Chicago has been showing the sign of weakness

bordering ~50% line. Historically, they have been successful in boosting sales by movies, etc. but they may close in next couple years

– Mamma Mia! has been flying at low altitude of ~60% for 5 years and is probably at most risk of closing among the five

How is Broadway doing overall as an industry?

How much impact does Tony have?

When do shows close? (are any of the long running

shows "at risk")

How is Broadway doing overall?

Broadway has experienced strong growth – almost entirely driven by price increase esp. for 2000 onward

(Average ticket has quadrupled in the last 30 years!)

0

500

1,000

1,500

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90

5.1%

$M

7.5%

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Million

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3.1%

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98

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90

$

4.3%

4.9%

Broadway gross revenue

# attendance

Gross rev. per attendance (~ avg. ticket price)

x

Dip in 2001 from 9/11

Note: Each year is represented by "season" (for example, 2013 means June 2013 - May 2014) Note: Includes both musicals (~82% of attendance) and plays (~18% of attendance) Source: The Broadway League

~70% of attendance by tourists in 2013

1

2

Real estate space (= # of theaters) has been flat... (85% of theaters are from the 1st half of 20th century)

40404040404040404040404040414141424141424242424242

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Note: "Broadway theaters" defined as professional theatres with 500 or more seats located in the Theater District and Lincoln Center along Broadway Source: Internet Broadway Database

1 Attendance

40 theaters can house total of 50 thousand audiences

5%

55%

1975-2000

30%

10%

40

1925-1949

1950-1974

1900-1924

# of Broadway theaters Year built

... and attendance has been stable at ~80% of capacity for the last 15+ years

86868182

7983

7982

83807979798079798081

0

20

40

60

80

100

2008

Average

Attendance as % of capacity

2014 2013 2012 2000 1999 1998 1997 2007 2006 2005 2004 2003 2002 2001 2011 2010 2009

Note: 2014 is partial year (Jan-Nov) Note: Capacity figure only reflects theaters with shows (i.e., the number would be lower if you include theaters in between shows) Source: The Broadway League

1 Attendance

Back-up: Within a year, ticket sales is highly seasonal (Busiest month experiences 1.5x attendance compared to the slowest month)

0.75 0.50 0.25 1.00 0.00 1.25

# attendance per month (million, 2003-2013 averaged)

Month Average

Dec

Nov

Apr

May

Jun

Jul

Aug

Sept

Oct

+50%

Jan

Mar

Feb Continued weak sales post holiday

Quiet post holiday seasons – no tourists & locals with tight budget

Increased marketing; some shows beginning to preview/open

Many new shows opening and spikes from spring breakers

Remaining new shows and Tony nomination giving boost

Tony award (good for winners, bad for losers) and beginning of summer

Summer break continues; dampened by 4th of July & lower buzz

The end of summer tourism

Some new shows begin to open, but not yet strong

Many new shows; local sales goes up, but still not many tourists

More new shows – continued hike in buzz

Increased sales from Christmas and New Year holiday audience

Underlying drivers

Source: Internet Broadway Database; New York Show Tickets

1 Attendance

The rate of Broadway ticket price increase has been faster even more than other "notorious" forms of entertainment

Movie ticket price NFL ticket price Broadway ticket price

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8

102

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07

$

+2.7%

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$

+3.9%

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125

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13

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09

20

06

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20

08

20

10

20

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07

$

+4.7%

Source: The Broadway League; Box Office Mojo; Statistica

2 Ticket price

Why can shows keep raising price?

Hypothesis

• Affluent (i.e., they "can" pay)

• "Tourists" – more willing to pay premium for the experience

• "Fans" – repeat at any cost

• No "viable" alternatives

Demographics of Broadway goers

• Average age ~44 years • Average Household income of $201,500 • 39% of goers (above the age of 25) has graduate degrees

• ~70% of attendance

– Domestic tourists ~49% – International tourists ~21%

• ~79% of tickets were bought by visitors who considered Broadway a very important reason for coming to NYC

• Average goer attended 4 shows • N/A (conceivably, you can analyze what are the other typical

theater markets like Las Vegas or more local productions and see how they have performed – but I ran out of time to conduct such analyses)

Source: The Broadway League

Overarching hypothesis: Broadway theater goers are not price sensitive

2 Ticket price

Back-up: Different demand/popularity of the shows result in creating wide distribution of ticket prices

5769

6970

74

7678

79

7979

8082

84

91

9598100

102

109

112115

122127

160

181

0 50 100 150 200

MOTOWN THE MUSICAL

MATILDA

ROCK OF AGES

THE PHANTOM OF THE OPERA

ON THE TOWN ONCE

MAMMA MIA!

CHICAGO

LES MISÉRABLES

CINDERELLA

PIPPIN IF/THEN

HONEYMOON IN VEGAS

THE LAST SHIP

SIDE SHOW

3.2x

Average Ø 95

KINKY BOOTS

JERSEY BOYS

ALADDIN

THE LION KING

BEAUTIFUL

THE BOOK OF MORMON

Average paid ticket price ($, in the week ending 11/23/2014)

HEDWIG AND THE ANGRY INCH

CABARET WICKED

A GENTLEMAN’S GUIDE TO LOVE AND MURDER

Source: Broadway World

2 Ticket price

Still "sold out" and ticket prices at

premium after 4 years

How much impact does Tony have?

What is Tony?

Source: Wikipedia

The Antoinette Perry Award for Excellence in Theatre, more commonly known informally as the Tony Award, recognizes achievement in live Broadway theatre • Started in 1947 • As of 2014, there are 24 categories of awards, plus several special

awards – awarding both Plays and Musicals

From 1997 to 2010, the Tony Awards ceremony was held at Radio City Music Hall in NYC (except for 1999, 2011 and 2012) • Typically, nominees are announced in the end of April • Tony Award ceremony usually takes place in early June

Winning Tony, especially "Best Musical", often helps boost ticket sales

We will look at four "Best Musical" nominees for 2014

A Gentleman's Guide to Love and Murder (2014 Tony "Best Musical" winner)

101102103

92

73

5150

5963

3943

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Gross as % of potential1

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14

/11

88

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/10

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14

/9

95

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/8

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Boost from Tony nomination on

4/28

1. Metrics to show the gross revenue as % of gross potential (theoretical figure assuming full seat sales at full price) Source: Internet Broadway Database

Won Tony Best Musical for 2014

on 6/8

Tony nomination significantly boosted sales

1

After Midnight (2014 Tony "Best Musical" nominee)

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Did not win Tony & closed on 6/29

Interesting that the level of sales before Tony Award looks pretty similar to Gentleman's

A bit of boost from Tony nomination on 4/28, but not as big

2


Aladdin (2014 Tony "Best Musical" nominee)

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Tony had absolutely no impact – it was and still is pretty well sold out

3

Summer tourism audience (family)


Beautiful: The Carole King Musical (2014 Tony "Best Musical" nominee)

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Strong/healthy growth – no impact from Tony

4


When do shows close? Are long running shows close to closing?

Shows that close generally experience ~50% gross of potential or below

67

59

484846

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120

-12 -7 -9 -8 -15 -14 -10 -13 -11


# of weeks before closing

-16 -6 -5 -4 -3 -2 -1 0

47 47 49 49 50

43 48 48 46 47

51 50

1. Metrics to show the gross revenue as % of gross potential (theoretical figure assuming full seat sales at full price) 2. Includes Big Fish, Billy Elliot, Bring it on the Musical, Chaplin, First Date, Ghost the Musical, Mary Poppins, Memphis, Nice Work if You Can Get it, Priscilla Queen of the Desert, Sister Act, and Spider-Man: Turn Off The Dark Source: Internet Broadway Database

• Each line represents a musical that closed in 2012-2014 above16 weeks of performance (12 shows2)

• Blue bar represents the average

There is generally a boost in the last 2

weeks for "one last time" demand

Top 5 longest running musicals that are currently on Broadway

4,608

5,423

7,080

7,486

11,159

0 5,000 10,000 15,000

The Lion King

Wicked

Chicago (Revival)

The Phantom of the Opera

Mamma Mia!

# of performances (as of 11/23/2014)

On Broadway since...

1988

1996

1997

2001

2003

1ource: Wikipedia; Internet Broadway Database

Chicago and Phantom both came close to ~50% gross potential range, but received boosts from movies, etc.

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130

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Chicago




Boost from movie ('05/1)

Boost from movie ('02/12)

25th anniversary

Chicago on its way out in next couple years?

Mamma Mia with more steady decline Movie had no impact

40

50

60

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130

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mamma Mia!



Movie ('08) but no impact

To close in next couple years?

The Lion King and Wicked both have strong performance

40

50

60

70

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110

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130

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Wicked


The Lion King


Unlikely to close anytime soon

Back-up: Top 5 longest running musicals on the same chart

40

50

60

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130

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Mamma Mia!

Wicked

Chicago



The Lion King


Case study on an epic "flop"

Example of an epic flop: Soul Doctor

What it is Broadway musical that details the life of Rabbi Shlomo Carlebach How it came about • Lead producer, Jeremy Chess (a New York retina surgeon, never produced a

show before) conceived the show after noticing the popularity of Carlebach's songs – a mix of soul, gospel and Jewish music – at weddings and other celebrations

• Director (Daniel Wise) and Choreographer (Benoit-Swan Pouffer) also have never worked on Broadway musicals before

Where it played • Debuted in New Orleans (2010) • Subsequent runs at

– Miami, FL (2011) – Ft Lauderdale, FL (2012) – NYC off-broadway (2013)

• Began Broadway preview at Circle in the Square theater (776 seats) in July, official opening in August and then closed in October, 2013 – 32 previews + 66 performances – Gross revenue of $1.9M

Source: Internet Broadway Database; ArtsBeat

What happened to the attendance, price, gross revenue?

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%

28-Jul-13

8-Sep-13

15-Sep-13

22-Sep-13

29-Sep-13

21-Jul-13

4-Aug-13

11-Aug-13

18-Aug-13

25-Aug-13

1-Sep-13

6-Oct-13

13-Oct-13

66

86 75

88 86

69

89 84

65 73

Gross revenue as % of potential1

Attendance as % of full capacity

Ticket price as % of full potential price x

23

0

20

40

60

80

100

15-Sep-13

6-Oct-13

22-Sep-13

32

8-Sep-13

%

24

1-Sep-13

31 24

29-Sep-13

29

13-Oct-13

31 32

25-Aug-13

18-Aug-13

11-Aug-13

33 30

4-Aug-13

32

28-Jul-13

26

21-Jul-13

28

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2324

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28-Jul-13

4-Aug-13

21-Jul-13

16

18-Aug-13

29-Sep-13

22-Sep-13

8-Sep-13

13-Oct-13

6-Oct-13

15 18

%

1-Sep-13

15-Sep-13

25-Aug-13

16

11-Aug-13

<- Preview

<- Preview

<- Preview

Avg. potential price = $130


Average ticket price remained very low (i.e., large number of free tickets, or "comps" given out) impacting gross

What did people think about the show in Broadway?

Summary

It suffered from low production quality ... ... bad book ... ... bad choreography ... ... even some decent casts couldn't save it ... ... making it a boring show that's not even bad enough to be hilarious

Quotes from BroadwayWorld.com message board

• "I see they had about 50 bucks to spend on scenery" • "They probably bought a bench at a thrift store and painted it blue" • "Yes, the whole thing (especially the costumes) looks very cheap and I spent the entire evening

thinking, 'why is this on Broadway?'"

• "The book was chock full of so many groaners I don't even know where to start. I think my favorite was "Creme de la creme? Creme de la shmeme!" But his future wife telling a group of hippies with the intonation of an infomercial, "I was on dope until I met Shlomo," was a close second. "

• "The choreography, which I believe has been totally rethought since the off-Broadway

production, was hysterically awful. All of the movements were way too modern; it looked like the ensemble had learned routines from So You Think You Can Dance, and not always the same one at the same time"

• "The acting is mostly very campy but I think Eric and Amber do a pretty great job with what

they're given" • "Eric Anderson does his best to ground the piece with his portrayal of Shlomo, but he only has

so much to work with" • "My advice would be to stay as far away from this as humanly possible. Even if you are offered

comps...hell, even if someone pays you to go - do not go" • "There are some groaners, but overall, it's not bad in a funny way like Got Tu Go Disco or In

My Life. Be prepared to be simply bored" • "The house emptied out at intermission (even though it was half empty to begin with)"

Source: BroadwayWorld.com message board

Back-up: Some insightful conversation between the two message board members...

ghostlight2

Mock them all you like, but this is a very personal labor of love by those who knew and loved this rabbi (his daughters, I believe, are involved). He truly was a bit of a legend and a game-changer. His was an interesting life but it's a badly-written show, and they refuse to change much of it, being too close to the man himself, perhaps. I happened to see it in its early stages in NYC downtown, and yet another version in New Orleans. I also saw it at Circle in the Square, where it had an amazing cast, but had not otherwise improved. I will not be seeing this latest version, but I don't get all the mean-spiritedness about it. Just don't go see it. All this schadenfreude is like kicking a puppy that's been run over already twice.

WhizzerMarvin TrinaJasonMendel

"ghostlight, For me the frustration stems from what you describe. There is such great source material here, and the daughters/creators just refuse to make any sort of REAL changes to improve the piece. That deserves scorn and derision in my eyes. What's that definition of insanity? You keep doing the same thing and expect different results? That's exactly what they're doing with this show. Remounting the same poorly-written junk in a new venue and expecting a different response from audience members/ticket buyers. After NYTW, New Orleans, Broadway (and I believe it started at NYMF) it's time to either do a major revision or throw in the towel"

Source: BroadwayWorld.com message board

What happened after it closed?

• About eight month later, in June 2014, the show was revived in Montreal for a one-month engagement...

• ... followed by a news that it will re-open off-broadway in NYC at Actors Temple Theater (~165 seats)

– Set to begin on December 1st, with an opening slated for December 15th

Source: Wikipedia

Just because a show flops doesn't mean that it's dead

Disclaimer

This document is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any security. Although the statements of fact in this report are obtained from sources that I consider reliable, I do not guarantee their accuracy and any such information may be incomplete or condensed. Views are subject to change on the basis of additional or new research, new facts or developments.

Business

20141128 BH Report: Broadway